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Retrospective HECS for global equity?

Release date: 20 Jan 2012

Professor Chapman is investigating the possibility of collecting HECS-style repayments from skilled migrants who arrive in Australia with qualifications obtained overseas, as part of a study into new applications of ICLs.

“We’re coming at this from an equity point of view,” said Professor Chapman of the Australian National University’s Crawford School of Economics and Government.

“One of the most unfair things in the international labour market is that many graduates from [countries like] India, the Philippines and Haiti end up in rich countries,” he said.

“[Those] who leave are usually the best qualified, so poor countries are heavily subsidising some of the richest countries. We want to think of a way of compensating governments for educational costs.”

Professor Chapman said ICLs could be the ideal mechanism to combat an injustice highlighted as early as the 1960s by Columbia University economist Jagdish Bhagwati.

He said it wouldn’t be too difficult to work out repayment levels because the costs of higher education in each country were fairly well known.

“What the government does with the money they collect is up to them, but I would think the case for compensating countries like India, Vietnam, Indonesia, Papua New Guinea and the Philippines is very strong,” he said.

He said the process should be guided not so much by the wealth of the countries as by the extent to which they subsidised their citizens’ higher education.

There wasn’t a strong argument for taxing graduates from countries like the US or Canada, where tuition fees were high, he said.

Professor Bhagwati, who is visiting Australia in July, is scheduled to meet the research team to discuss how the idea could be applied globally.

“We could start with Australia because we’re already doing it [HECS] here,” Professor Chapman said.

He is also considering HECS-style loans for student income support. “The financial problem for students is never going to be HECS – it’s having enough money to live properly while they’re studying.”

He said a number of countries already used HECS-style systems to fund living costs as well as tuition. “There’s no reason why it shouldn’t be part of the whole package.

“There is no reason in theory, concept or practice [that rules out] extending Youth Allowance and Austudy into HECS-type systems.”

Co-researcher Glenn Withers will examine whether ICLs could be used to boost assistance for Australians who study overseas.

Dr Withers said the existing OS-HELP loan scheme was a “good start” in helping Australians study overseas for a semester or two. But he said it was inconsistent with other loan schemes, and couldn’t deal with trends such as joint degrees.

“MBAs are full of this. You do a year at INSEAD and a year at the Melbourne Business School, and so on. As these sorts of arrangements emerge in a globalised world, funding is very important for Australian students who want to be international as well.”

Dr Withers resumes his position with the Crawford Centre next week after finishing his term as Universities Australia CEO today. He will also examine the possibility of extending ICLs to international students in Australia.

Five chief investigators are participating in the three-year study, which is funded by a $400,000 Australian Research Council linkage grant.

Since HECS was introduced in 1989, researchers have looked at the application of ICLs for parental leave, drought relief, paying fines, collecting public housing rent, training elite sportspeople and supporting research in small enterprises.

To date, Australia has only used ICLs for tertiary education.

Source: The Australian